Courtesy/News Source: cruiseindustrynews.com

Takeaways:

Newbuilds Key: “Our ongoing newbuild program is integral to the growth in earnings and return on invested capital over time,” said Arnold Donald, president and CEO of Carnival Corporation. “And as we mentioned before, not only are our newbuilds on average roughly 15 percent to 25 percent more cost efficient and approximately 25 to 35 percent more fuel efficient, they also help to create further demand for cruising.”

Pressure Is On: With headwinds from Cuba and voyage disruptions with the Carnival Vista, Carnival Corporation also noted headwinds for its Continental European brands citing heightened geopolitical and macroeconomic effects.

Cuba cancellations also hit Norwegian Cruise Line Holdings, which commanded a price premium of at least 25 percent on voyages that called in Cuba. Those cruises also featured a longer booking curve.

“In addition the discounts we offered as an inducement for guests to remain on the revised voyages and not cancel that were generous. Lastly, and in spite of the 50 percent refund. These sailings experienced a significantly higher level of cancellation often time reaching an excess of 80 percent,” said President and CEO Frank Del Rio.

“And while we were ready for a possible (stop) to Cuba, we were not quite frankly ready for the ban to take effect with only 12 hours advance notice,” he added.

China: Pulling the Norwegian Joy from China resulted in the doubling of her onboard revenue for Norwegian Cruise Line; while Carnival Corporation remains committed to its joint venture in the Chinese market, selling two Costa ships into its joint venture next year.

Royal Caribbean reported positive results from what could be the world’s cruise biggest market.

“The addition of the Spectrum of the Seas combined with further expansion of distribution channels in China, are driving yield growth for the products,” said Jason T. Liberty, CFO, Royal Caribbean Cruises.

Dispelling Myths: Cruise executives were quick to downplay a potential recession, promote national brand growth, and fired back on capacity growth concerns. 

Donald said that despite German capacity growth, AIDA Cruises was still performing well, calling it one of the company’s highest-yielding brands.

“AIDA is still growing earnings in Europe,” he said. “So we have an opportunity still to focus on what we want to focus on, which is earnings growth and return on invested capital, and we have a good base in AIDA to do that going forward and have the opportunity with Costa as well.”

Royal Caribbean Cruises Chairman and CEO Richard Fain said the industry had features that made it recession resistant, while Norwegian’s Del Rio had no concerns on capacity growth.

“Again capacity growth is an overblown metric that at this point and everyone's involvement in the industry I can't believe it's still out there,” Del Rio said. “This is a grossly underpenetrated industry, less than 4 percent of the world has cruised, less than 2 percent of the world spend on hospitality, they spend on cruises. There are more hotel rooms in Orlando and Las Vegas combined than there are cabins (on cruise ships).”